Lethimvula acquires the shareholding in Old Mutual Healthcare

Lethimvula Investments Limited (Lethimvula), a broad-based black owned company has acquired 100% of Old Mutual South Africa’s (OMSA) equity interest in Old Mutual Healthcare (OMHc) for an undisclosed amount. The sale will result in Lethimvula owning the respective administration and managed care businesses of Old Mutual Healthcare (OMHc), Medscheme Holdings and Rowan Angel.

Following implementation of the sale, Lethimvula’s administration companies will in effect, service approximately 2.3 million lives based o­n the 2006/7 annual report of the Council for Medical Schemes – making it the largest Black owned healthcare administration company, and the second largest of all healthcare administration companies in South Africa.

OMSA and Lethimvula have also agreed to the formation of two other companies: MarketCo and LoyaltyCo.

A.MarketCo will market and distribute OMSA’s products and financial services’ products and services to Subscribers of LoyaltyCo and to the members of the medical schemes administered by OMHc and the Lethimvula Group of companies (where approved by the trustees of those schemes as needs be).

B.LoyaltyCo, which by developing loyalty solutions, will seek to attract and retain members of the public who become Subscribers of LoyaltyCo and the members of the administered medical schemes.

According to OMSA Managing Director Paul Hanratty (pictured): “We believe the challenges of providing affordable and high quality medical scheme administration are best met by a company with sufficient critical mass, advanced IT, processes and high quality management. We see this deal with Lethimvula and Medscheme as meeting our strategic objective of delivering the best quality, value-for-money offering to market whilst at the same time opening up new distribution opportunities for OMSA.

Dr Anna Mokgokong, chairperson of Lethimvula said: “Lethimvula has been actively pursuing opportunities to grow and diversify the business both organically and through suitable mergers and acquisitions. Besides achieving scale benefits for our clients, this relationship with Old Mutual also gives us access to other attractive offerings for those clients and improves our value proposition in the market.”
In 2006, Lethimvula acquired Medscheme, o­ne of the largest players in the medical scheme administration and managed care market.

All parties undertook a reciprocal due diligence process and formal agreements have now been signed between OMSA and Lethimvula. The transaction is still subject to certain conditions being fulfilled which include the approval of the Competition Commission, certain regulatory authorities and the approval of the Board of Directors of AfroCentric Investment Corporation Limited (“AfroCentric”). AfroCentric is the prospective successor that will be the prospective controlling shareholder in Lethimvula.

On 23 September 2008, AfroCentric announced that subject to certain conditions being fulfilled, it will acquire 63.2% of the issued ordinary share capital of Lethimvula. All of the conditions to this transaction have been fulfilled and will be considered at a meeting of AfroCentric shareholders o­n 9th January 2009.